The pros and cons of AI home valuations
Can AI value your property quickly and cheaply? Yes, probably. What’s more important is whether or not that figure is accurate.
There’s an art and a science to valuing a home. Despite AI’s ability to pull median prices, sales histories and demographics in seconds, it struggles with judgment. A computer can’t feel a house, and it can’t always tell whether a good auction result at a neighbouring property came from three determined bidders or just a neighbour hoping to buy the house next door.
AI draws from data. It can’t step inside a home and see the luxe kitchen and family-friendly layout that makes it enviable. It also won’t be aware if a home has been sold at a reduced price to a relative, because it only looks at the final sale cost, the land size, number of bathrooms and bedrooms etc. It even struggles to understand why a corner block could be worth far more to a developer than a mid-block site next door.
A great deal of a property’s value also comes down to things you can only assess in person, such as:
- Natural light, aspect and elevation, and the sense of privacy a home offers
- Noise from a nearby train line, a busy driveway or bin storage, and smells drifting over from a takeaway shop or industrial site
Two terrace homes can look almost identical from the street but have very different values. One may have had a full renovation, while the other is damp, mouldy and rundown.
AI cannot pick up those differences from the outside. It can also mistake online price guides for genuine valuations when they are really just a general indication of buyer expectations. This becomes even more important in an uncertain market.
When interest rates, tax settings and buyer confidence are changing, the finer details can have a real impact on what a property is worth, and these are often the details AI misses; making a major financial decision based on an inaccurate estimate could be costly.
If you’re curious about what your home could be worth in today’s market, have a chat with your local real estate agent. There’s no pressure, just practical advice based on your property and what’s happening in your area.
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